This clause says you only pay damages if the other party's breach actually caused you a net loss after subtracting any money you saved or benefits you gained. For example, if a supplier fails to deliver goods but you buy cheaper replacements and save £5,000, you'd only recover the difference. This is actually fair and balanced because it prevents someone from profiting when the other side breaks the contract. It reflects the legal principle of "mitigation," which exists in both UK and US law—you can't sit back and let damages pile up; you must take reasonable steps to reduce your losses.
This is a reasonable clause that protects both sides, so you can usually accept it without worry. Just make sure the clause clearly defines what counts as a "benefit" or "saving" so there's no argument later about whether you actually saved money. Ask for examples in writing if the language is unclear. ---
Frequently Asked Questions
What does this clause mean in simple terms?
This clause says you only pay damages if the other party's breach actually caused you a net loss after subtracting any money you saved or benefits you gained.
Why should I care about this clause?
For example, if a supplier fails to deliver goods but you buy cheaper replacements and save £5,000, you'd only recover the difference.
What are my options?
This is actually fair and balanced because it prevents someone from profiting when the other side breaks the contract.
How does this affect small businesses?
It reflects the legal principle of "mitigation," which exists in both UK and US law—you can't sit back and let damages pile up; you must take reasonable steps to reduce your losses.